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Motorola addresses concerns over splits

Alex Scroxton

Motorola has assured its business partners they have nothing to fear from the imminent break-up of the communications giant.

The company announced it was to divest itself of the struggling and unprofitable mobile handset division at the end of March.

"All our two tier distribution business sits within the business solutions part of Motorola, so the impact should be negligible," said Tony Patrick, Motorola external communications manager. 

Patrick explained that separating the two businesses would allow the corporate-facing side to deepen its focus without worrying about the consumer business.

"The belief is that we can make both parts of the business profitable," said Patrick. 

Where the broadband and mobility solutions division goes from here has not been established and will be the subject of further negotiations in the coming months. 

The handset division has come to be seen as an albatross around Motorola's neck, and analysts have given a broad welcome to the divestment, which comes in response to a review conducted by CEO Greg Brown. 

The business slipped from a market-leading position after failing to come up with a suitable replacement for its iconic RAZR kit. The firm also took a kicking in the Asian markets where a price war with rival Nokia left it reeling on the ropes. 

Ovum mobile director Martin Garner thought that while the news could come as a relief for shareholders, the split would not automatically solve the firm's problems. He said Motorola would now have to knuckle down and put some thought into new products. 

"At any point Nokia and Samsung have a wide portfolio, but Motorola has just one or two core devices with nothing at the entry level," he explained. 

The split could also be good news for industry consolidation, according to Garner, who suggested both businesses could become acquisition targets, although he declined to name any potential buyers. 

Another source thought that while nobody would admit it, Motorola was hoping someone would take an interest in acquiring the handset unit: "I don't think there are any other reasons for selling it. You would basically be buying something for a knock-down price, so it could attract any number of parties." 

He suggested either venture capitalists or expansionist Asian companies such as Huawei could be interested. 

"Huawei will keep trying to test the Americans' resolve, and as far as I know there's no security risk in handsets," he remarked. 

In a parallel announcement on the same day, Motorola revealed it was laying off 350 employees - some engaged in handset research and development - from its Florida facility.


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